Correlation Between Byline Bancorp and Bank of the

Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Bank of the at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Byline Bancorp and Bank of the into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Byline Bancorp and Bank of the, you can compare the effects of market volatilities on Byline Bancorp and Bank of the and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Byline Bancorp with a short position of Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Bank of the.

Diversification Opportunities for Byline Bancorp and Bank of the

0.16

Correlation Coefficient

Byline Bancorp  Bank of the

Average diversification

The 3 months correlation between Byline and Bank is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the and Byline Bancorp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Byline Bancorp are associated (or correlated) with Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Bank of the go up and down completely randomly.

Pair Corralation between Byline Bancorp and Bank of the

Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Bank of the. But the stock apears to be less risky and, when comparing its historical volatility, Byline Bancorp is 2.37 times less risky than Bank of the. The stock trades about -0.08 of its potential returns per unit of risk. The Bank of the is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,542  in Bank of the on December 27, 2024 and sell it today you would lose (88.00) from holding Bank of the or give up 5.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Byline Bancorp  vs.  Bank of the

Byline Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Byline Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bank of the

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Bank of the is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Byline Bancorp and Bank of the

The main advantage of trading using opposite Byline Bancorp and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Bank of the can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bank of the will offset losses from the drop in Bank of the's long position.

The idea behind Byline Bancorp and Bank of the pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.